_ [Ss IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY NOT FOR DISTRIBUTION Nos. ACT G 64 of 1986, ACT G 65 of 1986, DISTRICT REGISTRY ACT G 67 of 1986. GENERAL DIVISION ) ) } ) ACT G 66 of 1986, ) ) ) ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN : HERBERT MAX MICHAELIS and NANCY MABEL MICHAELIS Appellants AND: CONTEC NOMINEES PTY. LIMITED Respondent MINUTE OF ORDER Poti JUDGE MAKING ORDER : Neaves J. nme 2 2 APR 1927 DATE OF ORDER : 15 April 1987 =} FEDERAL COURT OF TA AUSTRALIA WHERE MADE : Canberra an FRUCIPAL THE COURT: ~~ 1. Declares that the applicants, Herbert Max Michaelis and Nancy Mabel Michaelis are not entitled, either by virtue of sub-s.60(4) of the Bankruptcy Act 1966 (Cth) or otherwise, to continue in their own names the appeals to this Court from judgments of the Supreme Court of the Australian Capital Territory, such appeals being numbered ACT G 64 of 1986, ACT G 65 of 1986, ACT G 66 of 1986 and ACT G 67 of 1986. Orders that the applicants, Herbert Max Michaelis and Nancy Mabel Michaelis, pay the costs of the respondent, Contec Nominees Pty. Limited, of the application. Declares that it has no jurisdiction to strike out the said appeals numbered ACT G 64 of 1986, ACT G 65 of 1986, ACT G 66 of 1986 and ACT G 67 of 1986. Directs that the sum of $2,148.29 standing to the credit of the Federal Court of Australia Litigants' Fund on account of Herbert Max Michaelis and Nancy Mabel Michaelis be withdrawn and paid to the Official Trustee in Bankruptcy as trustee of the bankrupt estates of the said Herbert Max Michaelis and Nancy Mabel Michaelis. Note: Settlement and entry of orders 1s dealt with in Order 36 of the Rules. Federal Court Rules and in rule 124 of the Bankruptcy IN THE FEDERAL COURT OF AUSTRALIA Nos. ACT G 64 of 1986, ACT G 65 of 1986, ACT G 66 of 1986, ACT G 67 of 1986. AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN : HERBERT MAX MICHAELIS and NANCY MABEL MICHAELIS Appellants AND: CONTEC NOMINEES PTY. LIMITED Respondent CORAM: Neaves J. DATE: 15 April 1987 REASONS FOR JUDGMENT Prior to the Making on 5 December 1986 of sequestration orders against their estates, Herbert Max Michaelis and Nancy Mabel Michaelis ("the applicants") had instituted four appeals in this Court against judgments of the Supreme Court" of the Australian Capital Territory. Those appeals have not yet come on for hearing and the applicants have now applied to the Court by motion, notice of which was given on 19 March 1987, for leave to continue those appeals. Although the order sought 1s expressed in terms of leave to continue the appeals, the substantial question is whether thé appeals, or any of them, fall within sub-s.60(4) of 2. the Bankruptcy Act 1966 (Cth) ("the Act") so that they may be continued by the applicants in their own names. Sub-section 60(2) of the Act provides that an action commenced by a person who subsequently becomes a bankrupt is, upon his becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action. "Action" is defined in sub-s.60(5) to mean "any civil proceeding, whether at law or in equity". If the trustee does not make such an election within 28 days after notice of the action 1s served upon him by a defendant or other party to the action, he is to be deemed to have abandoned the action (sub-s.60(3)). Sub-section 60(4) provides: "(4) Notwithstanding anything contained in this section, a bankrupt may continue, in his own name, an action commenced by him before he became a bankrupt in respect of - (a) any personal injury or wrong done to the bankrupt, his spouse or a member of his family; or (b) the death of his spouse or of a member of his family." " Paragraph (b) of sub-s.60(4) clearly has no application in the present circumstances. The question whether any of the appeals answers the description of a civil proceeding in respect of any personal injury or wrong done to the applicants or either of them within the meaning of par.(a) of that sub-section is to be answered by examining the true nature of each appeal as a eer meee 3. disclosed by the relevant court record. This I now proceed to do. Appeal No. ACT G 64 of 1986 The first appeal (No. ACT G 64 of 1986) is froma judgment of the Supreme Court given on 9 May 1986 in an action for debt commenced by Contec Nominees Pty. Limited as plaintiff against the applicants as defendants (No. S.C. 459 of 1986). The plaintiff claimed an amount of $12,000 alleged to be the balance due by way of licence fees payable in respect of the period from 15 December 1984 to 15 March 1986 under an agreement dated 16 January 1985 whereby the plaintiff agreed to grant to the defendants a licence to occupy certain premises known as Unit 5, Block 3, Section 100, Yarralumla in the Australian Capital Territory. The plaintiff also claimed interest and costs. Notwithstanding that a defence had been filed on behalf of the defendants on 9 April 1985 traversing allegations in the statement of claim, notice of a motion by the plaintiff for leave to enter judgment pursuant to Order 15, rule 1 Of the Rules of the Supreme Court of the Australian Capital Territory was given on 2 May 1986. That motion was heard on 9 May 1986. At the conclusion of the hearing the Supreme Court ordered that the plaintiff have leave to enter judgment in the sum of $8,000 together with an amount of $307.62 representing interest under 5s.53A of the Australian Capital Territory Supreme Court Act 1933 (Cth) and» that the defendants have leave to defend in respect of $4,000. By their notice of appeal, which was not filed until 10 October 1986 and then without leave of the Court under Order 52, r.15(2) of the Federal Court Rules, the applicants seek orders that the judgment of the Supreme Court be set aside and that, in lieu thereof, it be ordered that the application for summary judgment be set aside and the applicants be given leave to defend the action. Appeal No. ACT G 65 of 1986 The second appeal (No. ACT G 65 of 1986) is froma judgment of the Supreme Court given on 19 September 1986 in an action commenced by Contec Nominees Pty. Limited as plaintiff against the applicants as defendants (No. S.C. 718 of 1986). The plaintiff claimed an amount of $2,000 being the licence fee payable on 15 April 1986 under the agreement already referred to for the occupation of the premises at Yarralumla. Judgment in default of defence was entered on 14 July 1986. The defendants sought orders setting aside that judgment and giving the defendants leave to defend and plead a counter-claim. On 19 September 1986 the Supreme Court ordered that the judgment entered on 14 July 1986 be set aside but that the plaintiff be allowed to enter judgment against the defendants nunc pro tunc, with costs calculated by reference to what would have been payable on a judgment of §2,000 obtained by default in the Magistrates Court. 5. By their notice of appeal filed on 10 October 1986 the applicants seek orders that the judgment of the Supreme Court be set aside and in lieu thereof it be ordered that the application for summary judgment be set aside and the applicants be given leave to defend the action. Appeal No. ACT G 66 of 1986 The third appeal (No. ACT G 66 of 1986) is froma judgment of the Supreme Court given on 26 September 1986 in an action commenced by Contec Nominees Pty. Limited as Plaintiff against the applicants as defendants (No. S.C. 1379 of 1986). The plaintiff sued upon an agreement made on 16 January 1985 between the plaintiff and the defendants whereby the defendants agreed to purchase the unexpired residue of the Crown lease of the premises known as Unit 5, Block 3, Section 100, Yarralumla in the Australian Capital Territory. It was alleged that it was a term of the agreement that a deposit of $31,450 was payable by the defendants and that, in a certain event (which was said to have occurred), the plaintiff was to be entitled to recover from the defendants any unpaid balance of the deposit as w liguidated damages. The plaintiff claimed the sum of $30,450 plus interest and costs. The defendants on 8 September 1986 filed a defence and counter-claim. The counter~claim alleged that a further agreement had been made between the plaintiff and the defendants in or about February or March 1986 varying the sale agreement in a number of respects and that the 6. Plaintiff was in breach of that agreement. Paragraphs 5 and 6 were in the following terms: "5. The Defendant [sic] .... says that as a result of the Plaintiff's breach the Defendant at the time was unable to proceed with the purchase orders with its Company as the USA export licences are the responsibility of the Defendant and thereby suffered loss. 6. The Defendant Csic] further says that as a result of the Plaintiff's breach the Defendant was delayed in placing and servicing orders and in order to mitigate and guarantee it asked and instructed its Company to make necessary financial arrangements to restore 1ts position." The counter-claim sought unspecified damages and interest. On the same day as the defence and counter-claim was delivered, the plaintiff gave notice of an application for leave to enter judgment for the relief claimed in the statement of clain. On 26 September 1986 the Supreme Court ordered that the plaintiff- have leave to enter judgment against the defendants in the sum of $30,450 and costs. By their notice of appeal filed on 10 October 1986 the applicants seek orders that the judgment of the Supreme Court be set aside and in lieu thereof the applicants be granted leave to defend the action. Appeal No. ACT G 67 of 1986 The remaining appeal (No. ACT G 67 of 1986) is from a judgment of the Supreme Court given on 19 September 1986 in an action commenced by Contec Nominees Pty. Limited as plaintiff against the applicants as defendants (No. S.C. 1380 of 1986) whereby the plaintiff sought possession of the premises previously identified, mesne profits and interest. The defendants filed a defence and counter-claim, the latter being in identical terms to that pleaded in the action No. S.C. 1379 of 1986 which has given rise to the appeal No. ACT G 66 of 1986. On 8 September 1986 the plaintiff gave notice of an) application for leave to enter judgment for the relief claimed in the statement of claim. On 19 September 1986 the Supreme Court ordered that the plaintiff be granted leave to enter judgment for possession of the premises. On 26 September 1986 that Court gave leave to enter interlocutory judgment for mesne profits, the amount thereof to be assessed by the Registrar. By their notice of appeal filed on 10 October 1986 the applicants seek an order setting aside the order of the Supreme Court made on 19 September 1986 and in lieu thereof that it be ordered that the application for summary judgment be refused and the applicants have leave to defend the action. " The Issue It is umnecessary for present purposes to examine the history of the provision which now appears as par.(a) of sub-s.60(4) of the Act or to discuss its provisions at any length. It is sufficient to refer to what was said by Lockhart J. in Faulkner v. Bluett (1981) 52 F.L.R. 115. The relevant proceedings in the Supreme Court were not unstituted by the applicants. They were the defendants in each of those proceedings. The relief sought against them was the recovery of liquidated amounts owing under an agreement granting a licence to occupy certain residential premises, the recovery of an amount by way of liquidated damages under an agreement for the sale and purchase of that property and the recovery of possession of those premises. So to describe the proceedings in the Supreme Court is sufficient to demonstrate that, upon their commencement, no one of them answered the description of a claim by the applicants falling within the language of par.(a) of sub-s.60(4) of the Act. In two of those proceedings, however, that in which the plaintiff claimed the balance of the deposit under the agreement for the sale and purchase of the property and that for the recovery of possession of the premises, the applicants filed a counter-claim. The question must, therefore, be answered whether that circumstance warrants a different conclusion to be drawn in respect of" those proceedings. Certainly the counter-claim 9. in each of those proceedings amounts to a claim by the applicants sounding in damages. But it is acclaim for breach of contract and is based on a cause of action which is properly characterised as one directly related to the applicants' property. Any damages to which applicants may be entitled would be estimated by immediate reference to their rights of property and not to pain felt by either applicant in respect of his or her mind, body or character: Wilson v. United Counties Bank Ltd. £19203 A.C. 102. The cause of action is not properly described as one relating to a personal injury or wrong done to the applicants or either of them. It may well be that the success of the proceedings in the Supreme Court has had an effect upon the applicants' reputation and their credit but that, if it be so, provides no basis for characterising the appeals as proceedings of the requisite kind. In my opinion, the applicants are not entitled, by virtue of sub-s.60(4) of the Act or otherwise, to continue in their own names the appeals to this Court numbered ACT G 64 of 1986, ACT G 65 of 1986, ACT G 66 of 1986 and ACT G 67 of 1986. The applicants must pay the respondent's costs of the application. Counsel for the respondent submitted that, if the application were to be dismissed, I should order that the four appeals he struck out. This order was sought on the basis that the appeals may not be continued by the applicants 'in their own names and the Official Trustee in 10. Bankruptcy, the trustee of the applicants' estates, has elected not to proceed with any of them. In my opinion, sitting as a single Judge of the Court, I have no jurisdiction to strike out the appeals. That is a matter for a Full Court exercising the appellate jurisdiction of the Court. The application is, therefore, refused. The Official Trustee in Bankruptcy, as trustee of the estates of the applicants, has sought a declaration that an amount of $2,148.29 lodged by the applicants with the District Registrar of the Court forms part of the assets of the applicants divisible amongst their creditors and an order that the amount paid out to the trustee. The amount was lodged with the District Registrar in the following circumstances. The petition for the sequestration of the applicants' estates was presented on 10 September 1986. It was listed for hearing on 5 December 1986. The debt upon which the petition was founded was the debt of $2,000 which was the subject of the judgment of the Supreme Court entered by default on 14 July 1987 and referred to above in connection with the appeal to this Court numbered ACT G 65 of 1986. As has already been mentioned, the notices of appeal from the various judgments of the Supreme Court had been filed on 10 October 1986. On 27 November 1986 Mr Michaelis lodged at the Registry of this Court a cheque for the sum of $2,148.29 drawn on an account il. in the name of the applicants with Citibank, Canberra. Queried as to the purpose of lodging the cheque, Mr Michaelis said that he wished the money to be held in respect of the appeal in matter No. ACT G65 of 1986 and drew attention to the fact that the amount was related to the debt alleged in the creditor's petition. At Mr Michaelis's insistence, the cheque was received and arrangements made for the proceeds to be paid to the credit of an account with the Commonwealth Bank of Australia entitled "Federal Court of Australia Litigants' Fund" (see Federal Court Rules, Order 63, r.2). The moneys remain credited to that account and may not be paid out of that fund otherwise than under an order of the Court or a Judge (Order 63, r.5). Mr Michaelis, in an affidavit sworn by him on 2 December 1986 in support of his opposition to the creditor's petition, stated: "I have lodged into the said Court under the matter ACT G 65 of 1986 the said monies as security as per annexure marked 'C'." The annexure marked "C" is a copy of the official receipt whereby the Registry acknowledged receipt of the sum of $2,148.29. The receipt bears on its face a reference to the matter No. ACT G 65 of 1986. On the hearing of the petition, Mr Michaelis referred to the lodging of the moneys in the Registry of the 12. Court. He said that the moneys would be available to the creditor should the appeal in matter No. ACT G 65 of 1986 fail. He further said that the moneys had been lodged with the Registry "to secure the creditor" but made it plain that they had not been lodged "as a method of satisfying the debt immediately prior to the appeal". I am satisfied that the sum of $2,148.29 is an asset of the applicants divisible amongst their creditors. I direct that that sum be withdrawn from the Federal Court of Australia Litigants' Fund and be paid to the Official Trustee in Bankruptcy, as trustee of the applicants' bankrupt estates. I certify that this and the preceding 11 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Neaves. Associate Y Dated: 15 April 1987 Mr Michaelis appeared in person Counsel for the respondent : Mr U.D. Boettcher Solicitors for the respondent : Meyer Boettcher & Clapham Counsel for the Official : Mr B.A. Meagher Trustee in Bankruptcy Solicitors for the Official Trustee in Bankruptcy Snedden Hall & Gallop 3 April 1987 Date of hearing